When Apple‘s quarterly financial data hit on Tuesday, I did what I regularly do: ponder how Apple could usefully spend its enormous cash reserves (now $41.7 billion). Well, there’s a hot new rumor to answer that: buy ARM Holdings, the British company that designs Mac microprocessors.

According to London paper the Evening Standard, the financial district is “aflame” with the idea, being loudly repeated by well-informed “gossips.” And the low-down is that this isn’t just meaningless lip-flapping–there’s some truth at the core of the idea, and it’s borne out by the fact that some five million shares in the company changed hands yesterday, leading to ARM being the biggest star in the day’s FTSE winner’s rankings.

Whether it’s all idle speculation, or even insider-informed gossip is one thing, the rumor makes technical and business sense. An ARM-based chip, developed in-house by Apple and dubbed the A4 is the power-sipping, high-performing powerhouse that sits inside the iPad. And the same chip, or a variant is very likely to be found inside this year’s new iPhone version too. ARM-based designs, like Qualcomm’s Snapdragon, are also found inside high-performing Android smartphones, and will be the CPU of many an iPad-competitor tablet this year.

ARM designed-chips were initially developed in the era when Intel was just beginning to explode its X86 processor power. And if you remember that time it was characterized by a bigger, faster, more powerful and more complex Intel chip every year. ARM thought differently and used a smaller set of core code operations (hence the “R” in the name, for Reduced Instruction Set Computing) which makes the moment-to-moment operation of the chips swifter–they have less complexity in the way of performing actual computing calculations. As a result RISC chips blaze along, concentrating on stringing together bunches of these simple codes to get the job done super-efficiently. They’re also much less power-thirsty than other designs for CPUs, and though that wasn’t too much of an issue when they first found use in the fabulous (if forgotten) Mac-like Archimedes desktop computer, it makes ARM chips ideal for mobile computers where battery life preservation is important.

And here’s a business fact that you may not know: ARM, which stands for Advanced RISC Machines, was founded in 1990 as a joint venture between Acorn (a world-leader in home and business computing at the time), VLSI Technology, and a then little-known Seattle-based computer company called Apple. ARM grew, internally and through acquisitions, went for IPO in 1998, and hasn’t looked back since: According to the company, ARM chips are inside over 75% of global devices that rely on 32-bit processors. This explains Intel’s recent desperate attempts to get its own Atom chips into this device class, doesn’t it?

If Apple took ARM back, for a sizeable but affordable figure in the $8 billion range, it would get all this business too, and be in the commanding position of owning the tech licensed by many of its smartphone competitors. It would also take ARM’s decades of chip development expertise in-house, giving the Cupertino clan the chance to develop even more Apple-specific chip designs. This could turn the next-gen iPhone, iPad and future iDevices into even more powerful pieces of hardware, with industry-leading battery lives.

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Hence, technologically speaking and financially speaking, this rumor makes all sorts of sense. Who knows whether it’ll happen, though, particularly given that M&A activities are usually cloaked in secrecy, and Apple is famed for its ridiculously high levels of mysteriousness. Intriguing notion, though, don’t you think?

To keep up with this news in a more real-time setting, follow me, Kit Eaton, on Twitter. That QR code on the left will take you to my Twitter feed too. (And if you’ve no idea what that spotty-looking thing is, then find out here.)

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About the author

I'm covering the science/tech/generally-exciting-and-innovative beat for Fast Company. Follow me on Twitter, or Google+ and you'll hear tons of interesting stuff, I promise.
I've also got a PhD, and worked in such roles as professional scientist and theater technician...thankfully avoiding jobs like bodyguard and chicken shed-cleaner (bonus points if you get that reference!)